The following information pertains to Cumberland Corporation: $$\begin{array} { l r }
\text { Beginning inventory } & 0 \text { units } \
\text { Ending inventory } & 6,000 \text { units } \
\text { Direct labor per unit } & \$ 20 \
\text { Direct materials per unit } & 16 \
\text { Variable overhead per unit } & 4 \
\text { Fixed overhead per unit } & 10 \
\text { Variable selling costs per unit } & 12 \
\text { Fixed selling costs per unit } & 16
\end{array}$$ What is the value of ending inventory using the absorption costing method?
A)$410,000
B)$300,000
C)$600,000
D)$216,000

Question

The following information pertains to Cumberland Corporation: $$\begin{array} { l r } 
\text { Beginning inventory } & 0 \text { units } \
\text { Ending inventory } & 6,000 \text { units } \
\text { Direct labor per unit } & \$ 20 \
\text { Direct materials per unit } & 16 \
\text { Variable overhead per unit } & 4 \
\text { Fixed overhead per unit } & 10 \
\text { Variable selling costs per unit } & 12 \
\text { Fixed selling costs per unit } & 16
\end{array}$$ What is the value of ending inventory using the absorption costing method?
A)$410,000
B)$300,000
C)$600,000
D)$216,000

Quizplus · Accepted Answer

Under the absorption costing method, the value of ending inventory includes direct materials, direct labor, variable overhead, and fixed overhead per unit. The calculation is as follows: (Direct materials + Direct labor + Variable overhead + Fixed overhead) * Ending inventory units = ($16 + $20 + $4 + $10) * 6,000 units = $50 * 6,000 = $300,000.

The Following Information Pertains to Cumberland Corporation What Is the Value of Ending Inventory Using the Absorption